REUTERS, KATHMANDU - Hundreds of Nepali student activists, demanding a roll back of fuel prices and transport fares, stoned or set fire to several vehicles in the capital Kathmandu on Thursday, police said.

State-run Nepal Oil Corporation increased petrol and diesel prices by about 25 percent last week saying the move was needed to cut losses due to a global oil price rise and to meet a domestic fuel shortage.

Protesters threw rocks and destroyed window panes of the car of Nepal's Chief Justice Kedar Prasad Giri, a Reuters photographer on the scene said. Giri was unhurt and escaped with his security guard to a nearby house.

"The street has turned into a battlefield with protesters throwing stones at the riot police," said Deepak Rijal, a local journalist at another protest site.

A police jeep was also set on fire, Rijal said.

Students are demanding a 50 percent discount in transport fares to students, from 33 percent now.

Petroleum dealers say fuel was still in short supply despite the rise in prices.

Nepal imports about 800,000 tonnes of petroleum products from India annually and owes millions of dollars to the state-run Indian Oil Corporation, the sole supplier of oil.

In January, a similar increase in oil prices was rolled back after countrywide protests crippled life for two days.